Why German Banks Face
An Especially Tight Squeeze

Updated Aug. 20, 2007 12:01 a.m. ET

Investors around the world are snubbing many types of short-term debt as credit worries spread. That is posing particular problems for German banks, which issue a lot of such debt, known as commercial paper.

Many used the borrowed money to buy securities, some of which were backed by U.S. mortgages to people with weak credit, a market that is crumbling. Adding to investor concern is a lack of transparency. Many banks hold their loans...